The Port Melbourne investment market continues to be tightly held. Major works continue in the immediate vicinity with the massive extension of Web Dock well underway.
The GMH site opposite our building remains in exclusive due diligence with Goodman Group. They are planning a major commercial/industrial development on this strategic land holding. Closer to the CBD, construction has commenced at a number of residential development sites. The new Planning Minister is still reviewing the Fisherman’s Bend planning controls so no new permits are being approved pending the outcome of the review.
There have been a number of sales of permitted sites in Fisherman’s Bend with Little Property recently selling a site in Lorimer Street for $60m. The site had approval for 940 apartments in two towers and was purchased by a Shanghai based developer. It is this buyer’s first acquisition in Australia.
There continues to be a lot of infrastructure spending in the area with major intersection/road upgrades at Todd Road where it connects with the Westgate Freeway.
In our last update, we informed investors of a pending leasing of the balance of space on level 2. We are pleased to advise that leases have been signed with K Line for a term of 7 years. K Line is moving out of another Terraplex asset 570 St Kilda Road and this move was facilitated and negotiated by management. K Line initially appointed a tenant representative to review their accommodation needs. After focussing on a couple of options, we were able to negotiate a suitable new leasing deal for both parties.
Emirates Leisure Retail (operator of the Hudson’s Coffee business) moved into their new offices in February and a new Hudson’s Coffee Cart commenced operations in the foyer in March. It has been an excellent addition to our building. As part of our ongoing capital improvement program, we have re-tiled the walkway to the entrance and added a wooden deck to the right hand side of the main entrance. Hudson’s Coffee will be using this area for outdoor seating.
The building is now fully leased for the first time since our acquisition back in May 2014. More importantly, our list of occupants is first class and the WALE (weighted average lease expiry) is an attractive 5.5 years.
Fisherman’s Bend update
The Fisherman’s Bend precinct was formally adopted by the previous Liberal State Government. Since Labour came into power, they have reviewed the precinct and recently made some significant changes to the boundary. Our building is now included (which is very positive) and we are seeking advice as to how this will impact 187 Todd Road. This is one of the largest urban renewal projects in Australia, which will significantly transform this area over the next 30-50 years.
Port Melbourne continues to be a tightly held market. There are no recent comparable sales to report.
Real Estate Fundamentals are Strong – Tim Church UBS, Head of Real Estate Australasia
1) Interest rates and the A$ have been supportive for Real Estate Valuations
2) And the outlook remain “lower for longer”
Appendix 2 – Hudson Coffee Fitout